INCOME TAX OFFICER, BHARATPUR V. HOTEL SURYA VILAS PALACE, BHARATPUR

ITA 121/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3643 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANUP SINGH ADD
• Keywords: Rejection of books of accounts; Value adopted by valuation officer; Valuation report; Reassessment proceedings; Set aside
• Section: 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 121/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 THE INCOME TAX OFFICER, WARD-1, BHARATPUR CUKE VS. M/S HOTEL SURYA VILAS PALACE, VILLAGE JATOLI GHANA, N.H. 11, AGAR ROAD, BHARATPUR (RAJ.) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFH4837H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA AGARWAL (CA) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ANUP SINGH (ADD. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 31/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 04/06/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 03.11.2017 FOR ASSESSMENT YEAR 2010-11 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,17,0 0,260/- MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN COST OF CONST RUCTION SHOWN BY THE ASSESSEE AND THE VALUATION AS PER DVO REPORT ON THE BASIS OF HIS STANDS TAKEN IN THE AY 2011-12 INVALIDATING THE ACTION OF THE AO OF REFERRING THE CASE FOR VALUATION U/S 142A OF THE IT. ACT ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 2 ON THE BASIS OF NON REJECTION OF BOOKS OF ACCOUNT B EFORE REFERRING TO DVO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) ERRED IN INVALIDATING THE REFERENCE TO DVO I NSPITE OF REJECTION OF BOOKS OF ACCOUNT IN THE ASSESSMENT ORD ER WHICH SHALL TANTAMOUNT TO REJECTION OF BOOKS OF ACCOUNT FOR THE PURPOSE OF MAKING REFERENCE TO DVO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION ON THE BASIS OF STANDS TAKEN BY HIM IN THE ORDER FOR AY 2011-12 WHEREIN RELIEF H AS BEEN ALLOWED DESPITE UNDER LAW NO SPECIFIC PROCEDURE OF REJECTION OF BOOKS OF ACCOUNT FOR THE PURPOSE OF REFERRING THE M ATTER TO DVO U/S 142A IS PRESCRIBED, SHALL THE FINDING OF AO REJ ECTION OF BOOKS OF ACCOUNTS IN THE ASSESSMENT ORDER NOR BE TREATED SUFFICIENT SATISFACTION FOR REFERRING THE MATTER TO DVO. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME DISCLOSING INCOME AT NIL ON 30.03.2011. D URING THE ASSESSMENT PROCEEDING FOR AY 2011-12, A REFERENCE W AS MADE TO THE DEPARTMENT VALUATION OFFICER (DVO) FOR VALUATION OF HOTEL BUILDING OF THE ASSESSEE FIRM. AS PER THIS VALUATION REPORT, TH E COST OF CONSTRUCTION OF THE HOTEL BUILDING OF THE ASSESSEE FIRM WAS DETE RMINED AT A FIGURE HIGHER THAN THE COST OF CONSTRUCTION DECLARED BY TH E ASSESSEE FIRM IN THREE DIFFERENT YEARS, INCLUDING THE YEAR UNDER CON SIDERATION AS PER THE DETAILS BELOW: COST OF CONSTRUCTION DIFFERENCE ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 3 (RS) DECLARED BY THE ASSESSEE FIRM ESTIMATED BY THE DVO 2009-10 86,51,551 2,03,51,806 1,17,00,255 2010-11 86,31,310 2,03,02,785 1,16,71,475 2011-12 2,24,105 5,27,102 3,02,997 TOTAL 1,75,06,966 4,11,81,693 2,36,74,727 3. THEREAFTER, NOTICE U/S 148 FOR THE IMPUNGED ASSE SSMENT YEAR WAS ISSUED AFTER SEEKING APPROVAL FROM THE APPROPRIATE AUTHORITY. THE NOTICE WAS DULY SERVED ON THE ASSESSEE AND THE OBJECTION S O FILED BY THE ASSESSEE WERE DISPOSED OFF BY THE ASSESSING OFFICER AND THE SAME IS NOT UNDER DISPUTE BEFORE US. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURNISHED A COPY OF VALUATION REPORT. THE AO ON PER USAL OF VALUATION REPORTS NOTED THAT THE REGISTERED VALUER HAS NOT PO INTED OUT ANY EVIDENTIAL OBSERVATION TO ESTABLISH THE BASIS OF HI S VALUATION ON THE SAME HOTEL BUILDING AT RS. 16563300/- TILL 10.12.20 10 AS AGAINST VALUATION OF RS. 20351806/- MADE BY THE DEPARTMENTA L VALUATION OFFICER AFTER PROVIDING PROPER OPPORTUNITY TO THE A SSESSEE FIRM AND THE MEASUREMENT ETC. HAVE BEEN TAKEN IN THE PRESENCE OF PARTNERS OF THE ASSESSEE FIRM. THEREFORE, CONSIDERING THE MATERIAL FACTS & CIRCUMSTANCES OF THE CASE THE VALUE ESTIMATED BY TH E REGISTERED VALUER WAS NOT FOUND REASONABLE AND ACCEPTABLE AND THE SAM E WAS REJECTED. AFTER CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE, THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER BASED ON CONCRETE MATERIAL ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 4 EVIDENCE AND CONSIDERING ALL THE STRUCTURAL QUALITY & MEASUREMENT, IS CONSIDERING AS REASONABLE AND THE SAME WAS ACCEPTED . THE DIFFERENCE IN THE VALUE OF CONSTRUCTION OF HOTEL BUILDING, DEC LARED BY THE ASSESSEE FIRM IN HIS BOOKS OF ACCOUNT AND VALUED BY THE DEPA RTMENTAL VALUER, WHICH COMES TO RS. 11700255/- [RS. 20351806 RS. 8 651551] WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM UNDE R THE HEAD INCOME FROM OTHER SOURCES. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND HIS FINDINGS ARE CONTAINE D AT PARA 5.3 OF HIS ORDER WHICH ARE REPRODUCED AS UNDER:- 5.3 I HAVE CONSIDERED THE ORDER PASSED BY THE AO A ND SUBMISSIONS FILED BY THE APPELLANT. I HAVE CONSIDERED THE FACT THAT THE ASSESSMENT UNDER SECTION 148 OF THE ACT WAS INITIATED ON THE S TRENGTH OF VALUATION REPORT FILED BY THE DVO DURING ASSESSMENT PROCEEDIN GS FOR AY 2011-12. IN THE SET ASIDE PROCEEDINGS AS DIRECTED BY THE HON BLE ITAT, JAIPUR BENCH IN APPELLANTS OWN CASE FOR AY 2011-12, ACTIO N OF THE AO IN REFERRING TO DVO FOR THE VALUATION OF THE PROPERTY HAS BEEN HELD INVALID AS THE SAME WAS REFERRED WITHOUT REJECTING THE BOOK S OF ACCOUNTS. EVEN DURING THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION, THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS. HONBLE ITAT JAIPUR BENCH IN ITS ORDER DATED 14/06/ 2017 HAS ALREADY DEALT WITH THE ISSUE IN DETAILS AND HAS COME TO THE CONCLUSION THAT THE REFERENCE TO THE DVO DURING THE YEAR UNDER CONSIDER ATION IS SUBJECTED TO THE DECISION BY THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA. IN THIS REGARD, HONBLE ITAT IN THE SET ASI DE ORDER AT PARA 5.2 ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 5 HAD CONSIDERED THE DECISION TAKEN BY THE HONBLE SU PREME COURT AND HAD REPRODUCED THE RELEVANT PART OF THE DECISION AS UNDER:- IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DEC IDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMUCH AS THE T RIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSING AUTHORITY COUL D NOT HAVE REFERRED THE MATTER TO DEPARTMENTAL VALUATION OFFIC ER (DVO) WITHOUT THE BOOKS OF ACCOUNTS BEING REJECTED, IN TH E PRESENT CASE, A CATEGORICAL FINDING IS RECORDED BY THE TRIB UNAL THAT THE BOOKS OF ACCOUNTS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. F OR THE ABOVE REASONS, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE ORDER PASSED BY THE TRIBUNAL STANDS RESTORE D TO THE FILE. ACCORDINGLY, THE ASSESSEE SUCCEEDS. FURTHERMORE, THE HONBLE ITAT JAIPUR BENCH HAS ALSO RECORDED THE DECISION OF THE JURISDICTIONAL RAJASTHAN HIGH COURT IN THE CASE OF DR. RAGHUVENDRA SINGH. SINCE THE REASSESSMENT PROCEEDINGS FOR THE YEAR UND ER CONSIDERATION DERIVES FROM THE STAND TAKEN FOR THE AY 2011-12, AN D THE SAME HAS BEEN HELD INVALID, THEREFORE THE ADDITION OF RS. 1, 17,00,260/- ON THE BASIS OF VALUATION REPORT OF THE DVO IS NO LONGER V ALID. MOREOVER, THE AO HAS NOT EVEN REJECTED THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION ALSO. ACCORDINGLY, THE ADDITION OF RS . 1,17,00,260/- IS DELETED AND THE APPELLANTS GROUND OF APPEAL ON THE ISSUE IS ALLOWED. ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 6 6. THE LD DR HAS VEHEMENTLY ARGUED THE MATTER AND R ELIED UPON THE ORDER OF THE ASSESSING OFFICER. PER CONTRA, THE LD AR HAS RELIED ON THE FINDINGS OF THE COORDINATE BENCH IN ITA NO. 738/JP/ 15 DATED 14.06.2017 AND SUBSEQUENT DECISION OF THE LD CIT(A) DATED 3.11.2017 WHEREIN THE ADDITION ON ACCOUNT OF DIFFERENCE IN VA LUATION OF THE HOTEL BUILDING WAS DELETED ON ACCOUNT OF THE FACT THAT RE FERENCE TO DVO WAS DONE WITHOUT REJECTING THE BOOKS OF ACCOUNTS. IT W AS SUBMITTED BY THE LD AR THAT FACTS OF THE PRESENT CASE ARE IDENTICAL AND BASIS THE SAME VALUATION REPORT WHICH FORMED THE BASIS FOR ADDITIO N IN AY 2011-12, THE ADDITION HAS BEEN MADE FOR THE IMPUNGED ASSESSMENT YEAR WITHOUT REJECTION OF THE BOOKS OF ACCOUNTS AND HENCE, THE A DDITION SO MADE BY THE AO HAS BEEN RIGHTLY DELETED BY THE LD CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE COORDINATE BENCH (SPEAKING THROUGH ONE OF US) IN ASSESSEES OWN CASE IN ITA NO. 738/JP/15 DATED 14.06.2017 FOR A.Y 2011-12 HAS ANALYSED THIS VERY ISSUE AND REFERR ING TO THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF SARGAM CINE MA VS CIT REPORTED IN 328 ITR 513 AND SUBSEQUENT HONBLE RAJA STHAN HIGH COURT DECISION IN CASE OF DR. RAGHUVENDRA SINGH VS CIT RE PORTED IN 49 TAXMANN.COM 544 HAS HELD THAT ASSESSEE AUTHORITY CO ULD NOT HAVE REFERRED THE MATTER TO DVO PRIOR TO REJECTION OF BO OKS OF ACCOUNTS. IT WAS FURTHER HELD THAT SAID POSITION EXIST PRIOR TO THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2014 IN SECTION 142A W.E.F 1.10.2014 WHEREIN IT HAS BEEN SPECIFIED THAT THE AO MAY MAKE A REFERENCE TO THE VALUATION OFFICER WHETHER OR NOT HE IS SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. HOWEV ER, FOR ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 7 DETERMINING WHETHER BOOKS OF ACCOUNTS WERE REJECTED PRIOR TO REFERENCE TO THE DVO, THE MATTER WAS SET-ASIDE TO THE FILE OF THE LD CIT(A). 8. IN THE INSTANT CASE, THERE IS NO FRESH REFERENC E TO DVO FOR THE IMPUNGED ASSESSMENT YEAR AND THE BASIS OF REASSESSM ENT IS THE EARLIER REFERENCE TO DVO WHICH WAS MADE ON 13.01.2014. THE REFORE, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT AND HONBLE RAJASTHAN HIGH REFERRED SUPRA CONTINUES TO APPLY FOR THE YEAR UNDE R CONSIDERATION AND THE AMENDED PROVISIONS OF SECTION 142A BROUGHT IN B Y THE FINANCE ACT, 2014 W.E.F 1.10.2014 ARE NOT APPLICABLE. 9. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THA T THERE IS NO FINDING RECORDED BY THE ASSESSING OFFICER REGARDING REJECTION OF BOOKS OF ACCOUNTS FOR THE IMPUNGED ASSESSMENT YEAR. FURTHER , THE REFERENCE TO DVO IN THE INSTANT CASE IS EVEN PRIOR TO THE ISSUAN CE OF NOTICE UNDER SECTION 148 ON 21.01.2016. THEREFORE, WE DONT FIN D ANY INFIRMITY IN THE FINDINGS OF THE LD CIT(A) THAT THE AO HAS NOT REJEC TED THE BOOKS OF ACCOUNTS AND ADDITION OF RS 1,17,00,260 ON THE BASI S OF THE EARLIER DVO REPORT IS NOT VALID AND THE SAME WAS RIGHTLY DELETE D. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/06/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 121/JP/2018 THE ITO, BHARATPUR VS. M/S HOTEL SURYA VILAS PALACE , BHARATPUR 8 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/06/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE INCOME TAX OFFICER, BHARATPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S HOTEL SURYA VILAS PALACE, BHARA TPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 121/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR